International trade is nothing new. It has been in existence even before the civilization of man. Although trading today is not like the olden times when large caravans of silks and spices cross the Mediterranean and the Pacific in wooden ships and boats, in essence it is still practically the same. Trade exists because a particular group of people have an abundant supply of products which others insufficiently have. Thus, in order to address the insufficiency of one group of people, the other groups should supply these needs,and vice versa.
Today, the idea and concept of trading has been technically laid out in terms of rules and policies. Unlike the old way of trading where people can just trade products right then and there, various rules and policies have been implemented for the protection of both parties in a trading partnership. Indeed, trading has revolutionized as the world becomes more technologically advanced. In fact, trading is even done over the internet nowadays. With the advances in technology, it is not surprising why international trading becomes more rewarding.
The import export business is not just any ordinary business. Once taken seriously, this can bring in a lot of money. Moreover, aside from the monetary compensation, the import export business is especially personally rewarding. These are probably some of the reasons why a lot of people are getting interested in this type of business more than any other businesses.
So, how should you do an import export business? Furthermore, what are the important reasons that would entice you to do the business? While there are probably a dozen or so reasons why people invest in the import export business, here are some of the most important reasons:
Insufficiency. Reality bites. There are just some things that you cannot produce or grow in your country. Thus, when this is the case, the only solution is to import these unavailable products and items from other countries. After all, why should you be deprived of the abundance of others? Therefore, for products and items that cannot be found in a particular country, there are always other countries that can easily supply these items.
Seal. In contrast to insufficiency, other home countries have an abundant supply of various products and items. In fact, there are even products that are just indigenous to a specific area. The abundance of these products to a particular country marks the seal of the product to the particular country. In other words, products are tagged to places and countries where these are abundantly and locally found. One good example is Indonesian wicker furniture, Arabica coffee, and Japan's green tea.
Cost. Although some countries may be abundant of a particular product, the production costs for the product might be very expensive. Thus, these products are exported to other countries where the production costs are cheaper. When this happens, even if the product is abundant in your country, the same product is actually cheaper when imported from another country. Therefore, for economic reasons, it is advisable to import these products rather than obtain these from the domestic front.
Importing and exporting are ways that can improve one's life forever. There is often a situation when a person wants to start a business in this area but can't due to lack of sufficient knowledge and expertise. They are the beginners who need to learn about the ways of business world models on export and import. In this article the basic concepts, models and terminologies of this sector of business will be explained.
Basic Concepts
Import means to supply a product (or service) to one's own country from any other, while export means to supply a product (or service) from one's own country to any other. Trading is the basic need and development of society because it is by default that one region or group or culture can not produce everything.
So this type of business is not new; in fact it dates back to the advent of human civilizations, although it has grown more sophisticated through years of civilizations. Introduction of modern technology and science has made it possible to import and export even from the furthest corners of the world.
For example, think of modern life without perfumes from Paris, electronics of South Korea, China and Japan, beer from Germany, cotton from Egypt and bananas from Alaska. In a year alone the US export-and-import reaches $1.2 Trillion with like 150 countries in total.
International Trade Models
There are several import export business models of economics that describe or try to describe) the international trades. The most popular one is Richardian model, which focuses on comparative advantage, meaning that countries specialize in goods. It also says that labor is the only primary input to production. Other models are Heckscher-Ohlin model which focuses on productivity of popular productions of specific goods. Others are new trade theory and gravity model.
Terminology
Even experienced internet entrepreneurs can be baffled with the technical terms used regularly by economics experts in the field of business, let alone the newcomers. Importing and exporting are such a sector that includes some alien but basic terms such as availability (the probability of finding a good at any one place at a time), manufacture's representative (salesperson specialized in a line/type of products), distributor and wholesale distributor (an Black Kidney Beans for sale organization buying your stuff and selling it to the other side), representative (salesperson who sells the products to distributor), retailers (tail end of business-chain) and others.